Transport, shipping, and fulfillment costs are a part of doing business. However, these costs can vary depending on where you’re doing business.
If your company has already established all or some of its supply chain and manufacturing in Mexico, relocating your fulfillment operation can help further reduce your operating costs. Likewise, if your shipping and order fulfillment centers are currently in the United States or Canada, nearshoring to a new facility in Mexico can result in significant savings.
Beyond affordability, Mexico logistics and fulfillment centers have a long history of success and customer service that provide other potential business advantages.
In this short guide, we’ll go over the top five benefits of moving your fulfillment and distribution operations to Mexico.
#1 Lower Operating Costs
Storage, labor, and logistics costs are all relatively affordable in Mexico.
- Mexico’s third-party fulfillment centers can provide storage for your goods at a reduced cost compared to their U.S. and Canadian counterparts.
- While labor costs are rising in the United States and Canada, it’s comparatively inexpensive to compensate your workforce in Mexico. At the same time, highly skilled managers and supervisors can ensure a high level of service.
- Because Mexico is so close in proximity to the U.S., shipping costs to American customers are low, especially as compared to offshore fulfillment warehouse centers.
Experienced operations managers have the years of experience it takes to streamline operations, resulting in further savings for the seller.
If you currently locate fulfillment and distribution in the U.S., you may be concerned about sticking to your current production calendar. But in most cases, nearshoring your operations in Mexico can keep you on a similar schedule.
If you already outsource your fulfillment internationally, there are still numerous reasons why a Mexico fulfillment center may better suit your needs.
#2 Low Taxes and Duties
The U.S. and Mexico enjoy a preferential trading agreement, and there are numerous potential savings when shipping goods from Mexico.
In particular, many direct-to-consumer shipments fall under Section 321 de minimis rules.
- Products with a retail value of less than $800 are not subject to taxes or duties
- With proper certification, goods can enter “informally” and clear ports of entry more quickly
If you already manufacture or finish your products in Mexico, Section 321 benefits reduce the duty costs associated with moving your inventory to a U.S. fulfillment center.
If you locate your manufacturing internationally, bringing finished goods to Mexico and then shipping them directly to U.S. consumers can result in significant savings on customs and duties.
#3 Reduced Shipping Times
Thanks to Section 321 de minimis rules, goods imported from a Mexico fulfillment center can quickly clear ports of entry as long as companies provide thorough documentation of the following:
- Country of origin
- Shipper information
- Description of merchandise
- Recipient name and address
In addition, Mexico’s geographic proximity to the U.S. can result in shorter shipping times, especially when compared to other international fulfillment service centers.
To avoid shipment delays, work with an experienced partner who can ensure your goods are properly labeled and certified before reaching the U.S. Customs and Border Control.
#4 Global Market Entry
Mexico’s proximity and trade agreements with the U.S. carry multiple benefits.
At the same time, Mexico has numerous other free trade agreements with nations in South and Central America, Europe, and Asia. In fact, Mexico has more free trade agreements than any other nation.
While each of Mexico’s thirteen free trade agreements vary, they all create preferential trading that can reduce barriers including duties and tariffs.
If you’re interested in drawing up the best market strategy for Mexico or other international markets, it’s important to note that a Mexico fulfillment center could potentially reduce the cost of shipping to customers around the world.
#5 Ensure Customer Service
If you host your manufacturing operations in Mexico, you’re familiar with some of the additional benefits of nearshoring:
- Time zone – Because Mexico’s time zones closely resemble those in the U.S., it’s easy to get in touch with the leadership team at your fulfillment center to discuss and resolve business issues.
- Ease of communication – U.S. companies are increasingly outsourcing their call centers and custom service to Mexico. There is a significant English-speaking population, which makes it easy to hire managers with whom you can easily communicate. Furthermore, your fulfillment center can independently field customer service questions.
- Experience – It’s possible to find an agent or service provider with years of experience providing top-notch fulfillment services to companies in the U.S.
Nearshore Your Manufacturing, Your Fulfillment, or Both With NAPS
Nearshoring can have numerous cost and time-saving benefits while ultimately providing your customers with the high-quality products and customer service they’ve come to expect from your brand.
However, doing business in an entirely new locale can present a learning curve.
At NAPS, we’re seasoned professionals with years of experience doing business in Mexico and understanding Mexican business culture. Whether your long-term goal is moving your fulfillment operation or locating your supply chain in Mexico, we have the connections and experience to streamline your seller experience.
Consult with us to find the solution that’s right for your business, whether that’s finding a partner, operating under a shelter company, or building your own fulfillment center from the ground up.